Economy

India among top 10 FDI recipients

After 2008, for the first time, India again broke in to the top 10 recipients of foreign direct investment (FDI) during 2014, the UNCTAD said in its World Investment Report 2015 on Wednesday. India jumped to the ninth rank in 2014 with a 22 per cent rise in FDI inflows to $34 billion. India was at the 15th position in the previous two years.

India, however, is the only BRIC (Brazil, Russia, India and China) country that hasn’t yet crossed the $50 billion-a-year FDI mark.

“Till the time an MP is afraid to appear to encourage FDI or business in India, the high favourability ratings will not convert into high inflows and they will remain low,” said UNCTAD’s Premila Nazareth Satyanand, releasing the report.

China became the largest recipient of FDI in 2014 with $129 billion inflows, followed by Hong Kong (China) that received $103 billion and the U.S. with $92 billion. At 39 per cent, Hong Kong saw the biggest surge in inflows during the year.

Russia dropped out of the top 10 as foreign investors exited its oil sector and other projects after Western countries slapped economic sanctions on it. Among the top 10 FDI recipients in the world, half are developing economies - Brazil, China, Hong Kong (China), India and Singapore.

In a development of significance to India, for the first time FDI inflows in to China’s services sector were greater than into its manufacturing sector.

Global FDI fell 16 per cent to $1.23 trillion in 2014 mainly due to the fragility of the global economy, policy uncertainty for investors and elevated geopolitical risks, according to the report. New investments were also offset by some large divestments.

India, however, dropped out of the top 20 countries in the outward FDI flows.

The report also found that developing countries lost $100 billion in tax revenues owing to investors routing FDI through tax havens such as Mauritius, and has made a strong case for multilateral action to address the issue.

The report records the big surge in investments from China into every region of the world, and especially in India’s neighbourhood. FDI inflows to Pakistan increased by 31 per cent to $1.7 billion as a result of rising Chinese FDI flows in services. Further, the country will benefit significantly from the China-Pakistan Industrial Corridor and associated Chinese investment in infrastructure and manufacturing in the overall context of implementing the “One Belt, One Road” strategy.

According to agreements signed between the two governments in April 2015, Chinese companies will invest about $45.6 billion in Pakistan over the next few years — $33.8 billion in electricity and $11.8 billion in transport infrastructure.

In Sri Lanka, where China has become the largest source of FDI in recent years, FDI flows from it rose. For example, a joint venture between two local companies and China Merchants Holdings (International) Company has invested $500 million in Colombo International Container Terminals, the largest foreign investment project in Sri Lanka. After two years of construction, the port started operation in August 2014.

A China-Sri Lanka FTAwill be signed in June 2015. Moreover, if the implementation of the China-led 21st Century Maritime Silk Route Economic Belt gains ground, an increasing amount of Chinese investment will flow to Sri Lanka, particularly in large infrastructure projects.

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Printable version | May 8, 2021 3:34:44 PM | https://www.thehindu.com/business/Economy/india-among-top-10-fdi-recipients/article7350866.ece

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